Cement prices skyrocket amid shortages

Prices of cement in Zimbabwe have gone up by as much as 100 percent over the past two months due to a combination of factors, including reduced imports, subdued local production, and growing demand.

The price of cement is now hovering around US$20 per 50kg bag, up from US$9 about two months ago. This has had a negative impact on the construction sector, as property developers are now paying more for cement, which is a key input cost.

The sharp increase in cement prices has been exacerbated by the expiry of import licenses, which has widened the supply gap.

The Government has been issuing import licenses to cement producers to allow them to bridge the gap between local production and demand. However, many of these licenses have now expired, which has led to a decrease in imports and a further tightening of supply.

Dealers importing cement without licenses are reportedly fined about US$2 000, adding to the cost of cement. However, the fines imposed on dealers seem to be relatively low, and many dealers are still willing to take the risk. As a result of high demand for cement, the dealers can still make a profit even after paying the fine.

The ongoing construction boom in Zimbabwe has also propelled the demand for cement.

The industry is experiencing rapid growth, driven by public investment in infrastructure projects, private sector investment in residential and commercial projects, and the increasing demand for housing and other infrastructure in urban areas.

From peri-urban areas to small towns to big cities, new residential and commercial properties are being built, and old buildings are being spruced up. In addition to the development of commercial and residential properties, the government is also funding several major infrastructure projects, such as roads and dams.

“Despite rising prices, demand remains strong,” said Ebenezer Rato, who runs a small hardware store in the high-density suburb of Budiriro in Harare. “Getting supplies is a nightmare, and I foresee prices continuing to rise if the situation doesn’t improve.”

Rato said the dealers were buying cement through third parties because big firms were preferring to sell to big clients. He said small cement dealers were buying in groups because their orders were too small to be individually processed by cement makers.

By combining their orders, they can get their orders fulfilled more quickly.

“We buy at around US$17 per bag and then sell at US$20,” said Rato. However, some dealers are charging as much as US$22 per bag, according to a survey by this publication.

A cement trader in Harare’s Central Business District (CBD) said they were paying kickbacks to secure orders, which was making the commodity even more expensive.

“That is the only way you can stay in business,” the trader, who identified him Manwa said.

The Government has not banned cement imports, but they fall under restricted imports. Importers require import licenses, and importing cement without a license carries a fine of US$2 000, which is level 12 on the ZIMRA’s scale of fines.

An official with the Ministry of Industry and Commerce said the Government has started processing import licenses to ease cement shortages and make essential building materials affordable, a move that is expected to benefit both consumers and businesses.

“We are only processing permits for companies and not individuals,” said the official, whose identity cannot be disclosed because is authorised to talk to the media.-ebusinessweek